Royal DSM And JLL Create Leading Pharma Services Company In USD 2.6 Bn Transaction; Global CDMO Company Combines DSM Pharmaceutical Products And Patheon

HEERLEN, Netherlands, Nov. 19, 2013 (GLOBE NEWSWIRE) --
JLL Partners ("JLL"), a leading middle-market private equity firm, and RoyalDSM, the global Life Sciences and Materials Sciences company, today announcedthe creation of a new company, which will be a leading global contractdevelopment and manufacturing organization (CDMO) for the pharmaceuticalindustry with anticipated sales of around USD 2 billion. It will be 51% owned byJLL and 49% by DSM.The name of the company (provisionally called NewCo) will be announced in thecoming months. NewCo will be formed by combining DSM's business group DSMPharmaceutical Products ("DPP") with Patheon Inc. (TSX: PTI) ("Patheon"), aftera successful completion of the transaction described below. NewCo will be aleading global contract development and manufacturing organization withanticipated 2014 sales of about USD 2 billion (pro-forma) and a strong EBITDAand operational cash flow.NewCo will have an end-to-end offering from finished dosage (drug products) toactive substances (APIs) and a global footprint of 23 locations across NorthAmerica, Europe, Latin America and Australia with about 8,300 employees.Combining DPP and Patheon is fully in line with DSM's strategy for its Pharmacluster as well as an excellent value creation opportunity as DSM and JLL willwork together to maximize the value of NewCo. For DSM, combining DPP withPatheon into NewCo is also a key step in the strategic transformation of itsPharma activities into partnerships.Once the transaction is complete, NewCo will add scale and new value chaincapabilities/technologies to expand its end-to-end service offering as acomprehensive solution provider to the industry. NewCo will operate as anindependent standalone company.The highlights of the transaction are as follows:  * NewCo will be owned by JLL (51%) and DSM (49%).  * JLL will contribute USD 489 million in cash to NewCo and DSM will contribute    DSM Pharmaceutical Products (DPP) and receive a seller note of USD 200    million, thereby valuing DPP at USD 670 million.  * NewCo has entered into a definitive agreement to effect a Plan of    Arrangement pursuant to the Canada Business Corporations Act ("POA") with    Patheon under which NewCo would acquire Patheon for USD 9.32 per share in    cash resulting in a:      * total enterprise value for Patheon of approximately USD 1.95 billion        (about €1.45 billion)      * 64% premium to Patheon's closing share price on 18 November, 2013  * Patheon's Board of Directors, acting on the unanimous recommendation of a    committee of independent directors, recommends that Patheon' shareholders    vote in favor of the POA.  * JLL and the executive officers and directors of Patheon, who collectively    own approximately 66% of the outstanding shares of Patheon, have signed    Voting Agreements in support of the POA.  * Committed financing to be funded at closing of USD 1.65 billion has been    secured from J.P. Morgan, UBS, Jefferies, Morgan Stanley and KeyBank.  * Subject to customary conditions, the transaction is expected to close in H1    2014.  * DSM will deconsolidate DPP after closing.  * The transaction is expected to be EPS accretive for DSM from 2015 onwards.Patheon is a leading provider of contract development and commercialmanufacturing services to the global pharmaceutical industry, with a focus ondrug products. In the 12 months ending 31 July 2013, the company recordedrevenues of USD 943 million and pro-forma consolidated EBITDA (per creditagreement definition) of USD 188 million. The company has around 5,900employees.DPP is a leading provider of contract development and manufacturing services tothe pharmaceutical, biopharmaceutical and agrochemical industries with a focuson drug products and APIs. In 2012 DPP realized net sales of €543 million witharound 2,400 employees.NewCo will have a unique breadth of service offerings with a focus on drugproducts and APIs with a wide range of technologies and will be able to offercomprehensive end-to-end solutions to a broad spectrum of companies ranging fromlarge pharmaceutical and biotech companies to specialty pharma companies,generics and emerging pharma companies.The combined company will also be a leader in proprietary softgel formulationsfor over-the-counter, prescription and nutritional consumer products. Theexclusive synthesis products and intermediates are targeted to the cropprotection, personal care, and fine chemicals products industries.Jim Mullen, currently CEO of Patheon, will be appointed CEO of NewCo uponcompletion of the transaction. Mr. Mullen joined Patheon in 2011 as ChiefExecutive Officer. Prior to joining Patheon, he served as CEO and President atBiogen Idec Inc., one of the world's largest biotechnology companies from 2003to 2010. He possesses over 30 years of industry experience, ranging frombiotechnology and pharmaceuticals to specialty chemicals, as well as extensiveexpertise in pharmaceutical and biotech manufacturing, engineering, sales,marketing, mergers and acquisitions.Feike Sijbesma, CEO and Chairman of the DSM Managing Board, said: "Fully in linewith our strategy, this is for DSM Pharmaceutical Products the perfect way toaccelerate growth and for DSM to maximize value for this business. By creating aglobal top CDMO organization I am convinced that NewCo as a standalone companywill be able to create substantial value. With this partnership DSM has made akey step in the strategic transformation of its Pharma activities intopartnerships whilst creating maximal value for all stakeholders."Paul S. Levy, Managing Director of JLL Partners, Chairman of the Board ofPatheon shared: "This partnership demonstrates JLL's commitment to buildingcompanies that create value, fill unmet needs and drive excellence within theirrespective industries. This is the strategic initiative and execution 'know how'that stakeholders have come to expect from JLL. NewCo is poised to transform theCDMO industry and we are excited to bring these two entities together."Stefan Doboczky, Member of the DSM Managing Board and responsible for the Pharmacluster,  commented: "Our customers bring life-saving and life-enhancingmedicines to people who need them around the world. They will greatly benefitfrom NewCo's unmatched depth and breadth of capabilities and services. I amconvinced that NewCo will be even better positioned to help customers succeedwith their unique needs."Financial informationDSM expects the transaction to be accretive to its earnings per share from 2015onwards. In accordance with the applicable accounting standards DPP will beclassified as assets held for sale in Q4 2013 and a non-cash impairment loss ofaround €120 million will be recognized as an exceptional item. From the closingdate onwards DSM will present the investment in NewCo as an associated accountin accordance  with the equity method. Under IFRS rules also DSM SinochemPharmaceuticals will be deconsolidated from 1 January 2014. Consequently, thereporting of the Pharma cluster in the core EBITDA of DSM will be discontinuedfrom the beginning of 2014.Additional informationJ.P. Morgan Limited is serving as financial advisor to DSM. Latham & Watkins LLPis serving as lead legal advisor to DSM, supported by Cleary Gottlieb Steen &Hamilton LLP, Norton Rose Fulbright Canada LLP, Allen & Overy and Hinckley,Allen & Snyder LLP. Morgan Stanley and Jefferies are serving as financialadvisors to JLL Partners. Legal advisors to JLL Partners are Skadden, Arps,Slate, Meagher & Flom LLP, Borden Ladner Gervais LLP and Simpson Thacher &Bartlett LLP.Conference callsToday DSM will hold a conference call for the media from 08.00 AM - 08.30 AM CET(+31 (0)20 53 15 871 or +44 (0) 203 365 3207) and a conference call forinvestors and analysts from 09.00 AM - 10.00 AM CET (+31 (0)20 53 15 871 or +44(0) 203 365 3207). Also, more information can be found in the presentation thatcan be found on www.dsm.com.JLL PartnersJLL Partners is a middle-market private equity firm with a 25 year track-recordof adding value to complex investments through financial and operationalexpertise. Since its founding in 1988 by Paul S. Levy, JLL Partners hascommitted approximately USD 4.2 billion across six funds, and developedsignificant expertise in the healthcare and other sectors. JLL is a controlinvestor and sources its deals from its deep network of industry contacts,applying its proven, value-oriented and growth driven investment approach toprovide limited partners with attractive risk-adjusted returns throughout allinvestment cycles.PatheonPatheon Inc. (TSX: PTI) is a leading provider of contract development andcommercial manufacturing services to the global pharmaceutical industry for afull array of solid and sterile dosage forms. Through the company's recentacquisition of Banner Pharmacaps - a market leader in soft gelatin capsuletechnology - Patheon now also includes a proprietary products and technologybusiness. Patheon provides the highest quality products and services toapproximately 300 of the world's leading pharmaceutical and biotechnologycompanies. The company's integrated network consists of 13 locations, including commercial contract manufacturing facilities and development centers acrossNorth America and Europe. Patheon enables customer products to be launched withconfidence anywhere in the world. For more informationvisit http://www.patheon.com.Patheon plans to file with the U.S. Securities and Exchange Commission (the"SEC") and furnish to its shareholders a proxy statement and managementinformation circular in connection with the proposed transaction with NewCo. Theproxy statement and management information circular will also be filed on SEDAR.INVESTORS AND SECURITYHOLDERS OF PATHEON ARE URGED TO READ THE PROXY STATEMENTAND MANAGEMENT INFORMATION CIRCULAR AND THE OTHER RELEVANT MATERIALS WHEN THEYBECOME AVAILABLE BECAUSE SUCH MATERIALS WILL CONTAIN IMPORTANT INFORMATION ABOUTPATHEON, NEWCO AND THE PROPOSED TRANSACTION. The proxy statement and managementinformation circular and other relevant materials (when they become available),and any and all other documents filed by Patheon with the U.S. or Canadiansecurities regulators, may be obtained free of charge at the SEC's website atwww.sec.gov or in Canada at www.sedar.com. In addition, investors andsecurityholders may obtain free copies of the documents Patheon files with theSEC or with Canadian securities regulators by directing a written request toPatheon Inc., 2100 Syntex Court, Missisauga, Ontario, Canada L5N 7K9, Attention:Corporate Secretary. Copies of Patheon's filings with the SEC and with Canadiansecurities regulators may also be obtained at the "Investors Relations" sectionof Patheon's website at www.patheon.com.DSM - Bright Science. Brighter Living.(TM)Royal DSM is a global science-based company active in health, nutrition andmaterials. By connecting its unique competences in Life Sciences and MaterialsSciences DSM is driving economic prosperity, environmental progress and socialadvances to create sustainable value for all stakeholders. DSM deliversinnovative solutions that nourish, protect and improve performance in globalmarkets such as food and dietary supplements, personal care, feed,pharmaceuticals, medical devices, automotive, paints, electrical andelectronics, life protection, alternative energy and bio-based materials. DSM's23,500 employees deliver annual net sales of around €9 billion. The company islisted on NYSE Euronext. More information can be found www.dsm.com.Or find us on:For more information:  DSM Corporate Communications        DSM Investor Relations  Herman Betten                       Dave Huizing  tel. +31 (0) 45 578 2421            tel. +31 (0) 45 5782864  e-mail media.relations@dsm.com      e-mail investor.relations@dsm.com  JLL Partners                        Patheon Inc.  Dan Agroskin                        tel. +1 919 226 3200  tel. +1 212 210 9369                e-mail media@patheon.com  e-mail d.agroskin@jllpartners.comDSM Forward-looking statementsThis press release may contain forward-looking statements with respect to DSM'sfuture (financial) performance and position. Such statements are based oncurrent expectations, estimates and projections of DSM and information currentlyavailable to the company. DSM cautions readers that such statements involvecertain risks and uncertainties that are difficult to predict and therefore itshould be understood that many factors can cause actual performance and positionto differ materially from these statements. DSM has no obligation to update thestatements contained in this press release, unless required by law. The Englishlanguage version of the press release is leading.Patheon Forward-looking statements:This  press release  contains "forward  looking information" or "forward-lookingstatements"  within the meaning of applicableCanadian securities laws, includingstatements  regarding the  proposed transaction,  the combined  company's plans,objectives,  expectations and intentions, leadership in the contract developmentand manufacturing services industry, the expected sales of the combined company,expected  timing and benefits of the  transaction, and the preparation, deliveryand  availability of a  proxy statement and  management information circular andother  relevant materials in  connection with the  proposed transaction, , whichforward-looking  statements may  use forward-looking  terminology such as "may","will",  "expect",  "anticipate",  "believe",  "continue",  "potential",  or thenegative  thereof or  other variations  thereof or  comparable terminology. Suchforward-looking statements may include, without limitation, statements regardingthe  completion of  the proposed  transaction and  other statements that are nothistorical facts.These forward-looking statements reflect beliefs and assumptions which are basedon Patheon's and Newco's perception of historical trends, current conditions andexpected  future developments, as well as  other factors management believes areappropriate  in the circumstances. In making these statements, Patheon and Newcohave   made   assumptions  with  respect  to:  the  proposed  financing  of  thetransaction;  the ability of Patheon and Newco to achieve expected synergies andthe  timing of same;  the ability of  Patheon and Newco  to predict and adapt tochanging  customer requirements, preferences and  spending patterns; the abilityof  Patheon and  Newco to  protect their  intellectual property;  future capitalexpenditures,  including the amount and  nature thereof; trends and developmentsin  the  contract  development  and  manufacturing  services  industry and othersectors of the economy which are related to these sectors; business strategy andoutlook;  expansion  and  growth  of  business  and  operations;  credit  risks;anticipated  acquisitions; future  results being  similar to historical results;expectations related to future general economic and market conditions; and othermatters. Patheon's and Newco's beliefs and assumptions are inherently subject tosignificant   business,   economic,  competitive  and  other  uncertainties  andcontingencies  regarding  future  events  and  as  such,  are subject to change.Patheon's  beliefs and assumptions  may prove to  be inaccurate and consequentlyPatheon's  actual results could differ materially  from the expectations set outherein.While  such forward-looking  statements are  expressed by  Patheon, as stated inthis  release, in good faith and believed by Patheon to have a reasonable basis,they  are  subject  to  important  risks  and  uncertainties  including, withoutlimitation,  the  possibility  that  certain  assumptions  with  respect  to theproposed  transaction  could  prove  to  be  inaccurate, risks and uncertaintiesrelating to the transaction and financing thereof, Newco's significant levels ofindebtedness  as  a  result  of  the  proposed transaction, Newco's inability tocomplete  the  anticipated  financing  as  contemplated by applicable commitmentletters  prior to  the contractually  required time  for closing of the proposedtransaction or otherwise secure favourable terms for such financing, approval ofapplicable  governmental authorities, required  Patheon shareholder approval andnecessary   court  approvals,  the  satisfaction  or  waiver  of  certain  otherconditions contemplated by the Arrangement Agreement, disruptions resulting fromthe   proposed  transaction  making  it  more  difficult  to  maintain  businessrelationships,  and changes in applicable laws or regulations, which could causeactual  results to differ materially from future results expressed, projected orimplied  by  the  forward-looking  statements.  As  a  result of these risks anduncertainties,  the proposed transaction could  be modified, restructured or maynot  be completed, and the results  or events predicted in these forward-lookingstatements  may differ materially from actual  results or events. These forward-looking  statements are  not guarantees  of future  performance, given that theyinvolve  risks  and  uncertainties.  Patheon  is  not  affirming or adopting anystatements  made by any other person in  respect of the proposed transaction andexpressly disclaims any intention or obligation to update or revise any forward-looking  statements, whether  as a  result of  new information, future events orotherwise, except in accordance with applicable securities laws or to comment onexpectations  of,  or  statements  made  by  any  other person in respect of theproposed transaction.Investors  should not  assume that  any lack  of update  to a  previously issuedforward-looking   statement  constitutes  a  reaffirmation  of  that  statement.Reliance on forward-looking statements is at an investors' own risk.Cautionary StatementNo  stock  exchange,  securities  commission  or  other regulatory authority hasapproved or disapproved the information contained herein.Press release-pdf: http://hugin.info/130663/R/1744101/586830.pdfPresentation to investors: http://hugin.info/130663/R/1744101/586831.pdf[HUG#1744101]

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